‘We can’t invest in productive assets without you’, says govt
The government is committed to allowing pension funds freedom of choice when it comes to where they invest their assets.
Joanne Gibson, head of pensions investment review at HM Treasury, said it did not want to undermine the autonomy pension funds currently enjoy but it would be pushing schemes to invest more in productive finance.
Gibson was addressing delegates at the Pensions and Lifetime Savings Association’s annual investment conference in Edinburgh this week.
She said chancellor Rachel Reeves’ plans to get pension schemes investing more in the UK economy had been met with widespread support during its investment review consultation.
Gibson said: “What we’re trying to do is put pension providers in the best place that they can to take advantage across the asset classes, and that includes productive finance.”
Gibson said the proposals have been heavily supported and the UK can no longer ignore that it was not investing in productive finance.
She said: “We need to address that. We need to work out how we can do it.”
Growing the UK
Gibson said pension funds in other countries, notably Canada and Australia, were investing in the UK.
She said: “A UK fintech firm has just managed to get a Canadian pension fund to invest in it.
“If Canadian pension funds are investing in the UK, why aren’t our UK pension firms so that we can help the UK?”
Gibson said said helping and supporting pension savers was not incompatible with helping domestic UK growth.
“Helping get better returns is obviously the thing that we’re trying to do for pension schemes, but that, in turn, can help wages, jobs, and prosperity.
“So that is how we see it. We see it’s a win, win, as long as it’s done properly.”
We could sit in our little ivory tower, but that’s not going to make it work
Joanne Gibson, HM Treasury
Ewan McCulloch, chief stakeholder officer of the Border to Coast pension fund, said the Local Government Pension Scheme was an ‘outlier’ because it holds over 20 per cent of its assets in the UK.
He said changes were needed to get the wider pensions industry to invest more in the UK such as a long term planning and an industrial strategy.
“But if it is a 10 year industrial strategy, let’s make sure it lasts for 10 years and it’s not revised and changed after a year or two, because that’s not helpful for investors.”
Risk and return
Lizzy Holliday, director of public affairs and policy at Now:Pensions, said fiduciary duty was paramount.
She said there were some synergies between that and investing in productive finance but schemes had to tread carefully.
“Martin James, our director of investment, talks about the three R’s, so risk, return and real world impact.
“It’s about how those three things align and what the relationship is between those things, so you can still achieve the correct risk and return profile whilst also having a real world impact.
“When we’re thinking about the UK, we’re looking at a lot of different assets and private market assets, including moving into investment in UK social housing, for example. So there are ways and means of doing this.”
Gibson told delegates the outcome of the review would be published ‘in the spring’ and the government wanted to continue working alongside the pension industry.
She said: “We can’t do this without your expertise, your knowledge. We could sit in our little ivory tower, but that’s not going to make it work.
“So for me, it’s how we’ve done this is just as important as the content, because we can’t do it without you. I hope it feels like we have.”
Samantha Downes is a freelance financial journalist
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